A New Public Equity Issue from a Company with Public

question 19

Multiple Choice

A new public equity issue from a company with public equity previously outstanding is called a(an)

• A)initial public offering (IPO).
• B)American depository receipt (ADR).
• C)seasoned equity offering (SEO).
• D)private placement.

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Definitions:

Risk Premiums

The additional return demanded by investors for taking on higher risk, over and above the risk-free rate of return.

Real Risk-Free Rate

The interest rate on a risk-free asset, after adjusting for inflation, indicating the true return on a risk-free investment.

Inflationary Expectations

Anticipations of future inflation that can influence economic behaviors in the present.

Default Risk Premium

The additional amount a borrower must pay to compensate the lender for assuming the risk that the borrower may default on the loan.